<Have we passed “Peak Travel?” The Oil Drum DrumBeat: June 21, 2008>

140 comments on Saudi Arabia - opening the tap?

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westexas on June 20, 2008 - 11:12am Permalink | Subthread | Parent | Comments top

No argument from me (although I would argue that "difficult" is not the same as "impossible"), but we can also say that it is a near certainty that Saudi Arabia will show three straight years of annual production below their 2005 annual rate, at about the same stage of depletion that the prior swing producer, Texas, started declining.

Meanwhile, their consumption is currently going to "infinity and beyond," on track to double to 4 mbpd in 2015, from 2 mbpd in 2005, against a recent total liquids production rate of about 10 to 11 mbpd.

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TJ on June 20, 2008 - 11:17am Permalink | Subthread | Parent | Comments top

How much of the ~9 mbpd do you think is allocated to maintain the income of the Saudi upper class? Can they actually let the internal consumption go to 4 mbpd?

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westexas on June 20, 2008 - 11:25am Permalink | Subthread | Parent | Comments top

I have suggested Phase One and Phase Two declines. In Phase One, cash flow from export sales increases, because oil prices go up faster than net oil exports decline. In Phase Two, oil price increases can't offset the export declines. We would expect to see a positive feedback loop in Phase One.

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jeffvail on June 20, 2008 - 11:38am Permalink | Subthread | Parent | Comments top

Perhaps "Phase Two" should be split:

Phase 1: Revenues increase as prices rise faster than export declines.
Phase 2: Revenues decrease causing rate of domestic consumption increase to slow, but overall domestic consumption still increases; net exports decline at faster rate than geologically-driven decline.
Phase 3: Revenues decrease rapidly enough to cause overall domestic consumption to decline; net exports decline at a slower rate than geologically-driven decline.

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westexas on June 20, 2008 - 11:45am Permalink | Subthread | Parent | Comments top

I think that Phase Three would be the point at which a lot of remaining world trade consists of net energy exporters trading energy for food and other essential goods.

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xeroid on June 20, 2008 - 1:54pm Permalink | Subthread | Parent | Comments top

At what point do we think the UK will get to Phase 3?

The UK still has oil for a while, we could export again if we stopped consuming so much.

Maybe food is more important than oil - we might have to export oil just to get enough to eat if other countries won't loan us the money?

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Termoil on June 21, 2008 - 5:16am Permalink | Subthread | Parent | Comments top

WT,

Howmuch of that 2MBD goes inot industrial production rather than consumption. I assume they produce most of there eelctricty with oil and have some sizables desal plants but aren't they also ramping up aluminimum production to value add to the oil? Is the expected exapansion of KSA consumption more to do with industrial growth rather than private consumption?

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mbnewtrain on June 21, 2008 - 9:47am Permalink | Subthread | Parent | Comments top

I would suggest that much of the KSA internal consumption that is for industrial purposes fuels economic growth in the Middle East and Asia. Therefore, the oil taken off the export market largely does not displace oil used elsewhere like OECD. US's problem caused by ELM is fueling the auto/truck/airplane based transportation system which consumes 3/4 of all oil and liquid fuels.

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140 comments on Saudi Arabia - opening the tap?

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